F&O strategy: Nandish Shah recommends a bullish spread on the Federal Bank




BULL SPREAD strategy on the FEDERAL BANK

Buy FEDERAL BANK (expires June 30) 95 CALL at Rs 2.35 and simultaneously sell 100 CALL at Rs 1.10

Batch size 10,000

Strategy cost Rs 1.25 (Rs 12,500 per strategy)

Maximum profit of Rs 37,500 if Federal Bank closes at 100 or above at June 30 expiry.

Breakeven point Rs 96.25


Rationale:

  • We saw a long build in Fed Bank futures, where we saw a 14% increase in open interest (Prov) with a 3% increase in Fed Bank.
  • The Fed’s main trend turned positive as it closed above its 200-day EMA.
  • The stock price broke away from the descending trendline, adjoining the highs of April 04 and April 29, 2022.
  • Momentum oscillators like RSI (11) and MFI (10) are sloping up and placed near 60, indicating the strength of the current uptrend.


Disclaimer: Nandish Shah is a Technical Research Analyst at HDFC Securities. He holds no position in the stock. Views are personal.


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First published: Fri 03 Jun 2022. 07:28 IST

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